Bids picked for Orchard

Orchard Funds Management’s advisers KPMG have begun finalising a shortlist of bidders with proposals to rescue the struggling property firm.

Rival Melbourne-based fund manager and listed developer
APN Property Group
is believed to be one of the favourites, with a scrip-for-scrip bid.

Such a bid would give shareholders in the unlisted Orchard Funds Ltd access to liquidity by swapping into a listed vehicle.

Most of Orchard’s register comprises former noteholders – including institutions, Orchard executives and unit holders – who accepted a $77 million debt-for-equity swap in late 2008.

But there is no certainty, according to market sources, that the deal could provide the fresh equity needed to prop up Orchards’ many funds, including its largest – the $765 million Diversified Property Fund.

The principal lenders to that fund – National Australia Bank and Bank of Scotland International – have granted an eight-day extension on the review date for negotiations on almost $420 million of debt. The latest deadline falls on Friday, although chief executive David Hinde has maintained he is confident of achieving a longer-term refinancing.

Mr Hinde has been at loggerheads with disgruntled financial advisers whose clients are stranded in Orchard’s property funds. In a bid to stem the unrest, Orchard’s board took on two new directors recently.

The planners, spear-headed by financial planning firm Centre Capital, are backing an offer by a private consortium which is being advised by corporate advisory firm TaemasBridge.